Regulatory: Doing business overseas— the accidental exporter

Five things you should know about the deemed export rule

Did you know that giving a Chinese national a tour of a biotech laboratory in the U.S. may be viewed by the U.S. government as the equivalent to exporting biotechnology to China?  If this comes as a surprise to you, count yourself in the majority of people who are generally unaware of the “deemed export” rule. Pursuant to the rule, the disclosure of controlled technology to a foreign national in the U.S. without appropriate export licenses can lead to large fines and criminal liability—even if no products are ever shipped out of the country.

Want to learn more? Here are five points to keep in mind regarding deemed exports:

  1. Your employees may be subject to the deemed export rule.

A company may need an export license to provide information to its employees in the United States. To the surprise of many businesses, even foreign nationals who are legally in the United States (often under long-term professional visas) may be subject to the deemed export rule.

While a license will not be required for most foreign nationals if they do not have access to controlled technology or source code, employers should review the job duties of their employees to make sure a license is not required. In fact, since February 2011, the U.S. Citizenship and Immigration Services Form I-129 requires companies petitioning for certain nonimmigrant visas for foreign workers to certify that they have—or do not need—an export license for their technologies.

Contributing Author

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Eric Wilson

Eric J. Wilson is a shareholder in Godfrey & Kahn's Litigation Department and a member of the White Collar Defense and Investigations Practice Group. He...

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Contributing Author

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Wendy Arends

Wendy Arends is an associate in the Godfrey & Kahn's Madison office, where she advises businesses, organizations and trade associations regarding their interactions with local,...

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